Yesterday before the market open, and when futures were still deeply in the red, we warned readers to take off all shorts for one reason: Gartman had just made his latest, most bombastic prediction, saying in an overnight note to clients, that “positions on the long side have to be reduced into any strength that may develop; that we fear that the bull markets are indeed finished and that bear markets are now full engaged.”
To this we said that the S&P is “now effectively assured to close green.”
The S&P not only proceeded to surge immediately after, but the Dow Jones Ind. Average hit a new all time that very day. In fact, it was the biggest intraday point reversal in the Dow Jones since 2008, confirming that the Gartman Letter is the single best source of alpha available, perhaps in Wall Street history, as long as it is used appropriately, i.e., flipped 180 degrees.
So what does Gartman think now: surely he must have flip-flopped by now, explaining today’s surprising swoon lower in not only the S&P but certainly the Nasdaq which plunged shortly after the start of trading? The answer:
STOCK PRICES HAVE SOARED ALL ACROSS THE GLOBE now that the US elections are out of the way and have been fully settled and now that Mr. Trump has given his first conciliatory, gentlemanly and truly presidential speech as noted above. We see no reason to try to discount our comments made here yesterday for they were truly and entirely wrong. As we were writing TGL yesterday morning the investment world was seemingly on fire following Mr. Trump’s election news. The S&P futures were hitting limit down; the Nikkei was nearly 800 points lower; the dollar was plunging and gold was up $60/oz. But then, only a few hours later, only an hour or two after we had sent TGL to our clients around the world, as Mr. Trump made his now rather famous acceptance speech the investment world turned 180 degrees around; buying replaced panic selling in the equity markets that were open and the equity futures markets that are open seemingly 24/7; the dollar turned dramatically around and for the better; bond market began to tumble and gold came rapidly off its highs. One speech… that’s all it took. But it caught the investment world by complete surprise.
We were wise enough not to put forth direct and “official” recommendations to sell stocks in our recommendation section yesterday for we wished not to sell into the panic that was developing, but clearly knowing only what we knew at the time and ex-Mr. Trump’s speech, we suggested very strongly in the text of our commentary the need to reduce exposure materially. Had we known that Mr. Trump was going to give the speech that he gave we would have suggested buying equities instead, but we did not. The “game” had not yet changed by then; it has since.
What do we know now? We know that “infrastructure” was the single most important word in Mr. Trump’s acceptance speech and that that shall guide our trading/investment philosophy going forward. We shall resurrect our familiar philosophy of wishing to own only “those things that if dropped on your foot shall hurt,” for if “Infrastructure” is to be the guiding principal of the Trump Administration then steel, cement, asphalt, bricks, mortar, coal, ball bearings, construction and drilling equipment shall be our focus. Not to think so, and not to act accordingly, shall be wrong.
You know what to do.
via http://www.zerohedge.com/news/2016-11-10/gartman-we-wwere-truly-and-entirely-wrong Tyler Durden